ETH Drops Back Under $1,200 to Probe 21DMA, but Technicals Still Bullish
- Cryptocurrencies look set to end what has otherwise been a strong week on a sour note.
- Ethereum was last down about 4.5% on Sunday, but still has a favorable near-term technical outlook.
- Polkadot is eyeing a breakout to annual lows while Cardano and Solana consolidate within pennant structures.
Cryptocurrencies look set to end what has otherwise been a strong week on a sour note. Total cryptocurrency market capitalization was last just above $900 billion, down about 3.0% on Sunday and over 6.0% lower versus Friday’s weekly highs in the $960 billion area.
But total crypto market cap remains above its 21-Day Moving Average at $895 billion. Moreover, cryptocurrency markets remain on course to have added over $50 billion in market cap, or over 6.0%.
The downside on Sunday is being felt evenly across major cryptocurrencies. Bitcoin, the world’s largest by market cap, was last changing hands just under $21,000, down 3.2% in the last 24 hours according to CoinMarketCap. That marks a near 7.0% drop of around $1,500 from last Friday’s multi-week highs in the $22,400 area.
Profit-taking in thin weekend trading volumes is likely driving the latest pullback, amid a lack of fresh fundamental developments. Risk assets like stocks and crypto are likely to trade cautiously ahead of the release next week of US Consumer Price Inflation data for June.
US economic data this week (June jobs report) strengthened the case for a 75 bps rate hike from the Fed later this month. Next week’s US CPI data will likely seal the deal. The data is likely to show US price pressures remain near multi-decade highs. An upside US inflation surprise could weigh heavily on stocks and crypto, as happened in mid-June.
Ethereum was last trading lower by about 4.5% on Sunday. The world’s second-largest cryptocurrency by market cap was last trading around $1,160, down from earlier session highs near $1,220. On Friday, the cryptocurrency failed in an attempt to break above its late-June highs in the $1,280 area.
ETH/USD has since pulled back about 9.0% from these levels, though is still up about 8% this week. However, the cryptocurrency’s technical outlook is still looking good. ETH has been consolidating within what appears to be an ascending triangle in recent weeks.
An uptrend linking the mid-June, late-June and early July lows are likely to offer support if ETH/USD dips under its 21DMA. Ascending triangle formations often precede a bullish breakout.
If Ethereum can muster a push above the $1,280 level, that would open the door for a swift rally towards its 50DMA around $1,440. Above that, there isn’t much by way of notable levels of resistance until $1,700. This level had previously been a key area of long-term support.
The native token to Polkadot’s blockchain DOT was last trading lower by about 6.0% on Sunday. That means the cryptocurrency has fully erased its prior weekly gains. DOT/USD was last trading in the $6.80 area, having failed in recent days to get above its 21DMA.
DOT is now eyeing a retest of monthly lows in the $6.60 area and then June’s sub-$6.50 annual lows just below it. Unlike Ethereum, Polkadot’s technical outlook is not looking so good.
DOT/USD has been consistently unable to get above its 21DMA in the last few months. Meanwhile, its price action has been consistently capped by a downtrend that has been in play since mid-May.
In the last few weeks, DOT has formed a pennant structure and appears to be now eyeing a bearish breakout. A break below $6.60 would likely trigger a cascade of selling pressure that would see the cryptocurrency break out to fresh annual lows under $6.35.
Below here, there is very little by way of notable support until the mid-$4.50s.
The native token of the Cardano blockchain ADA was last down about 4.0% on Sunday, in tandem with broad crypto downside. ADA/USD was last changing hands around $0.458 and is slightly in the green on the week.
ADA continues to consolidate within a pennant structure that has been in play now for a few weeks. Macro developments this month and how they impact crypto risk sentiment, plus the success (or not) of Cardano’s upcoming Vasil hardfork upgrade may determine whether the cryptocurrency breaks to the upside or downside.
The native token to Solana’s blockchain SOL was last down about 3.7% on Sunday in the $36.0s. That’s just over 8.0% lower versus Friday’s highs around $40, but still up close to 10% on the week. The cryptocurrency is currently probing its 21DMA around $36.60, having pulled lower from its 50DMA at $38.20.
Solana has also been consolidating within a pennant structure in recent weeks. Solana bulls will be hoping that Ethereum breaks higher as this would likely bring Ethereum-competitors (like Solana and Cardano) higher with it. A break above $40 could see SOL quickly rally to test resistance in the $48 area.